Order Definition – What is Order in Trading? | CFI LB

order

An order or trade order is a client’s instruction to their brokerage firm to buy or sell a financial asset on their behalf. Orders are usually placed through an online [trading platform] such as CFI’s [MetaTrader 5] trading platform.

 

The two major types of orders that every investor should familiarise themselves with are the market order and the limit order.

 

A market order is a request a trader sends to their broker to instruct them to execute a trade at that exact moment and the best possible price. Market orders are usually executed in seconds or even milliseconds, provided there is a liquid market at the given moment the order has been placed. When a market order has been completed, it is known as a ‘filled order’.

 

Limit orders

 

A limit order is another order type traders must be familiar with before starting to trade on a live account. This type of order is also referred to as a pending order which allows traders to buy and sell financial assets at a fixed price in the future. For example, if you decide to buy gold at $1,700, you could enter a limit order for this amount. This means that you would not pay more than $1,700 for that particular asset. Bear in mind, that it is still possible for you to buy the asset for less than $1,700 if you wish to do so.

 

Digging deeper there are four types of limit orders:

 

  • Buy limit: an order sent from a trader to their broker to purchase an asset below the current price
  • Sell limit: an order sent from a trader to their broker to sell an asset above the current price
  • Buy stop: an order sent from a trader to their broker to buy an asset at a price above the current market price
  • Sell stop: an order sent from a trader to their broker to sell an asset at a price below the current market price

 

Key takeaways

 

  • An order is a request from a trader to a broker to buy or sell an asset on behalf of the trader
  • Orders include market orders which are executed at market price or pending orders
CFI Financial Group is an award winning global financial markets provider with over 23 years of experience and regulated entities in several jurisdictions, focused on offering impeccable execution and trading conditions including very low spreads, professional services, dedicated support and powerful tools.
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CFI provides execution-only services and does not provide any investment advice. To make an investment decision, you cannot rely on the content of this website, or on any information, opinion, report or other materials (“Information”) you receive from CFI, or its representatives. Such Information is general and does not consider your objectives and your financial situation, thus they shall not be considered in any way as an express or implied promise nor a guarantee of any profit or limit of loss. CFI shall not bear any liability in case you used or relied on such Information. Please ensure that you make your own research and seek independent advice if necessary.

Forex and CFDs are leveraged products that incur a high level of risk. A small adverse market movement may expose the client to lose the entire invested capital. The majority of retail client accounts lose money when trading in CFDs. Please be aware of trading risks and that you could sustain a loss exceeding your deposited funds, even if a stop loss is used.

CFI Lebanon is regulated by the Banque du Liban and the Capital Markets Authority

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